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The Miracle and Morality of the Market
The Miracle and Morality of the Market
Richard M. Ebeling
Have you ever stopped to think about how much of the
world around us we take for granted? How often do any of us reflect on the law
of gravity that keeps the moon revolving around the earth or on the chemical
workings of our internal organs after we have eaten a meal? Yet whether we
think about or even understand the law of gravity or the processes of chemical
reactions, the moon continues to travel around the earth and the food we
normally eat continues to be digested. These physical and biological processes
operate whether or not we think about or understand them.
If the wonders of the physical world and the complexities
of our own biology often seem miraculous to us, we should be no less awestruck
at the miracle of the marketplace. Just as the forces of gravity and the
internal chemistry of our bodies operate without conscious human intervention
and control to direct or regulate them, so too the market brings together the
actions of multitudes of producers with the desires and demands of an
equivalent multitude of buyers with no central directing and commanding hand
overseeing the processes at work. Just as most of nature and much of human
biology are “self-regulating,” so too is the greater part of our economic
activities in society.
The Market Knows More than We Can Ever Master
Day in and day out we give little thought to the vast and
complex array of economic processes, which if they were to stop or severely
malfunction would mean hardship or even disaster for many of us. The
supermarkets are daily replenished with wide varieties of fruits, vegetables,
meats, canned and packaged goods, dairy products, and many other items. We
crowd the shopping malls and find them filled with practically every
conceivable commodity we can imagine, with each of them offered in attractive
and diverse varieties. Just think of the wide spectrum of shoes and clothes
placed at our disposal in those malls as an example of this. And if we do not
want the inconveniences and irritations of crowded shopping areas, a growing
number of us now do an increasing amount of our shopping over the internet
with the mere click of the “mouse.”
Even if we wanted to fully understand how all those goods
are actually brought to the marketplace for our various wants and desires,
virtually none of us would be able to trace through all the intricate ways by
which our demands are satisfied. Back in 1958, Leonard Read, the founder of
FEE, wrote a famous essay titled “I, Pencil.” He outlined a history of
manufacturing a simple old-fashioned wooden pencil, from a tree being cut down
in a forest and the mining of the graphite in a faraway country to its
assembly and finished form so that it might be readily available for purchase
by any of us in some neighborhood store. Read’s central insight was to remind us that no one individual or even wise and
informed group of us possesses all the knowledge or information that has gone
into that pencil’s manufacture.
Furthermore, it is not necessary for anyone to fully
understand the processes involved in making that pencil for it to be available
to us and our uses for such a writing instrument. Indeed, if it were required
for some mastermind to know all that is needed to know to make all of the
goods offered to us everyday on the market, the variety of goods available to
us would be both fewer in number and poorer in quality.
Market Competition and the Price System
How are the activities of an increasingly larger group of
individuals successfully coordinated, so that all the multitudes of demands
and supplies are brought into balance and harmony? The Austrian economist and
Nobel Laureate Friedrich Hayek showed how all of the knowledge and information
in society can be encapsulated in the price system of the free-market economy.
In our roles as both consumers and producers we communicate to one another
what we think goods, resources, capital, and labor services are worth to us in
their various and competing uses through the prices we are willing to pay for
them. These “price signals” serve as the means for all of us to decide and
coordinate what we want and are willing to do together with other members of
society.
Thus, and indeed quite miraculously, it is not necessary
for an “economic czar” to rule over and command us in our everyday market
activities to assure that a vast quantity of food gets to the supermarkets or
that thousands of different varieties of goods are constantly available in the
shopping malls or other stores and businesses throughout the land. Each
individual finds his own corner of specialization — guided by those
opportunities, expressed in market prices, that seem to offer the greatest
likelihood of earning an income that will enable him to buy from others all of
the goods he himself desires.
Competition in these voluntary interactions of the market
helps us to discover where each of us can best serve our fellow men within the
system of division of labor while pursuing our own personal interests. The
competitive process tests us through the reward of profits and the penalties
of losses. Profits lure us into those production activities that our
neighbors, as consumers, want us to do more of. Losses warn us that we have
undertaken production actions that those same neighbors think are not worth
the costs of our continuing to do them in the same way.
No overseer’s whip is needed to prod people to do more
of some things and less of others. No paternalistic planner is needed to
assure that everything that is wanted is produced and in the most economically
cost-efficient way. No restraining regulations and controls are needed to
hamper the free choices and actions of the multitudes of millions in society
— other than the crucial and general legal rules against murder, theft, and
fraud in our dealings with one another.
Mutual agreement and voluntary consent are the bases of
these market relationships. It is not the police power of the government, with
its use or the threat of violence and force, that compels the cooperation and collaboration of humanity.
The Morality of Market Relationships
There is also an important moral element in this
functioning free-market economy. There are none who are only masters and
others who are simply servants. In the market society we are all both servants
and masters, but without either force or its threat. In our roles as producers
— be it as men who hire out our labor for wages, resource owners who rent
out or sell our property for a price, or entrepreneurs who direct production
for anticipated profits — we serve our fellow men in attempting to make the
products and provide the services we think they may be willing and interested
in buying from us.
“Service with a smile” and “the customer is always
right” are hallmarks of the seller’s deference to those to whom they offer
their supplies. What motivates such attitudes is the fact that in an open,
competitive market no one can compel us to buy from a seller who offers
something less attractive or more costly than what some rival of his is
presenting to us for our consideration. And why are we interested in not
offending or driving away some potential customer into the arms of our rival
suppliers? Because only by successfully making the better and less expensive
product can we hope to earn the income that then enables us to re-enter the
market, now in the role of consumer and demander of what our neighbors are
offering to sell to us.
As consumers, we become the “masters” who those same
neighbors attempt to satisfy with newer, better, and cheaper products. Now
those whom we have served defer to us. We “command” them, not through the
use of force but through the attraction of our demand and the money we offer
for the goods they bring to the market. By how much we can “command” the
service of others in the market in our role as consumer is directly related to
the extent we have been successful in our service to our neighbors as
reflected in the money income we have earned from satisfying their wants and
desires.
In a free society, no man is required to do work or
supply any good he considers morally wrong and ethically questionable. He may
earn less from choosing to supply something that is valued less highly in the
market, but he cannot be forced to produce anything that God and/or conscience
dictates to be wrong. On the other hand, we cannot prevent others from
supplying a good or service we find morally objectionable. The ethics of
liberty and the free market require that we use only morally justifiable means
to stop our neighbors from demanding and supplying something that offends us.
We must use reason, persuasion, and example of a better and more right way to
live.
Unfortunately, too many of our fellow men want to
preserve or extend a return to a form of a slave society — regardless of the
name under which it is presented. Too many want to dictate how others may make
a living, or at what price and under what terms they may peacefully and
voluntarily interact with their fellow human beings for purposes of mutual
material, cultural, and spiritual betterment.
Moral Courage for Winning Freedom
Our task, for those of us who understand and care deeply
about human liberty, is to reawaken in our fellow men an awareness of the
miracle and morality of the market. The task, I know, seems daunting. But it
must have seemed that way to our American Founding Fathers when they heralded
the truth of the unalienable rights of man for which they fought and then won
a revolution, or when advocates of economic freedom first made the case for
the free market.
The world was transformed by these ideals of the morality
of free men in free markets. What is most important is that each of us
understands as best we can the miracle and the morality of the market economy.
Too often the friends of freedom allow the advocates of various forms of
government regulation, control, and redistribution to set the terms of the
debate. Freedom will not win if we do not put those proponents of political
paternalism on the defensive.
By what moral right do they claim to tell other men how
to peacefully go about their private and market affairs — as long as those
men do not use murder, theft, or fraud in their dealings with others? By what
ethical norm do those political paternalists declare their right to take that
which others have honestly acquired through production and trade, and
redistribute it without the voluntary consent of those from whom it has been
taken? By what assertion of superior wisdom and knowledge do they presume to
know more than the individual minds of all the members of society about how
the market should go about the business of manufacturing all the things we
want, and matching the demands with the supplies?
Defenders of individual freedom and the market economy
have nothing to be ashamed or fearful of in advocating the free society. The
American system of limited government, personal liberty, and free enterprise
liberated the individual creativity and energies of many millions of people.
It provided the greatest opportunity for individual betterment and the highest
standard of living ever experienced in human history. It also generated the
most charitable and philanthropic society in the world. Therefore, it should
be the critics and opponents of this system of individual freedom that should
have to justify their continuing calls for reducing our liberty.
It was clear thinking and moral courage that won men
liberty in the past. Liberty can triumph again, if each of us is willing but
to try. We need to take to heart the words of the free-market Austrian
economist and long-time FEE senior adviser, Ludwig von Mises:
“Everyone carries a part of society on his shoulders; no one is relieved of
his share of responsibility by others. And no one can find a safe way out for
himself if society is sweeping towards destruction.... What is needed to stop
the trend toward socialism and despotism is common sense and moral courage.”
 Dr. Richard Ebeling, the president of the
Foundation for Economic Education, has been a long-time friend of liberty. He
has not only written and lectured about the cause of freedom, he has also
lived it. In 1991, while consulting on market reform and privatization in the
former Soviet Union, he joined the defenders of freedom and faced Soviet tanks
in Vilnius, Lithuania, and again in Moscow, Russia, during the attempted
hard-line communist coup d’état.
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